Morgan Stanley’s board will focus on the selection of CEO James Gorman’s successor at its summer and fall meetings, a person familiar with the situation said, while the outgoing boss looks to clear the decks by resolving major regulatory matters.
Gorman, who has run the Wall Street giant since 2010, announced last month that he would step down within a year, setting off speculation about which executive would be chosen to succeed him in one of the most powerful roles in finance.
The bank’s directors will deliberate over three internal candidates at a meeting in London in July and later gatherings in New York in September and October, the person said, on the condition of anonymity because the process is confidential.
Morgan Stanley co-presidents Ted Pick and Andy Saperstein are widely viewed as the front-runners for the top job, with Pick seen as having a slight edge, the person said.
Dan Simkowitz, the firm’s head of investment management, is also a contender, the person added, but no final decision has been made.
A Morgan Stanley spokesperson declined to comment, as did Gorman, Pick, Saperstein and Simkowitz when contacted directly.
The timing of deliberations, which has not been previously reported, shines fresh light on the status of one the most closely watched CEO successions on Wall Street.
Gorman will become executive chairman for a period when the new CEO takes over, he said in May, and be on hand in case turmoil resurges in the banking sector.
REGULATORY MATTERS
Before Gorman hands over the reins, he wants to wrap up several regulatory matters.
“There’s a whole range of things that I wouldn’t mind either getting set, or dealing with, before I step down, so whoever replaces me has a complete clean sheet,” Gorman told investors at a conference earlier this month. “Most of that will happen within a year, and then we’re off to the races.”
Among the issues is an investigation by the U.S. Securities and Exchange Commission and the U.S. Attorney’s Office for the Southern District of New York into Morgan Stanley’s practices around block trading, or large sales of shares. The bank is in talks to resolve the probes, it said in a May filing.
Block trades are typically placed by institutional investors. The investigations focus on whether the firm or its employees broke the law by sharing or using information about impending block transactions, it said in a February filing.
Gorman also wants to deal with international regulations expected to be proposed this summer, the person said. The tougher rules could require major banks to hold as much as 20% more capital.
Regulatory stress tests, another one of the outstanding matters, were clarified this week. Major banks aced the tests, according to results published on Wednesday, which showed big lenders have enough capital to weather a severe economic slump.
